FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended August 1, 1997

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                        Commission File Number - 1-6797


                             TEXFI INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


                              Delaware 56-0795032
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)


         5400 Glenwood Avenue, Suite 215, Raleigh, North Carolina 27612
                    (Address of principal executive offices)
                                   (ZIP Code)

                                 (919) 783-4736
              (Registrant's telephone number, including area code)


                  Number of shares of Common Stock outstanding
                       at September 15, 1997 - 8,841,696


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No


<PAGE>



                          QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED AUGUST 1, 1997

                         PART I - FINANCIAL INFORMATION


Item 1.  Consolidated Financial Statements

         Texfi Industries, Inc. (the Company") has prepared the consolidated
financial statements included herein, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The consolidated balance
sheet as of November 1, 1996 has been taken from the audited financial
statements as of that date. Certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's latest Annual
Report on Form 10-K.

         The consolidated financial statements included herein reflect all
adjustments (none of which are other than normal recurring accruals) which are,
in the opinion of management, necessary for a fair presentation of the
information included. Operating results for the thirteen-week and thirty-nine
week periods ended August 1, 1997 are not necessarily indicative of the results
that may be expected for the year ended October 31, 1997. The following
consolidated financial statements are included:

         Consolidated Statements of Income for the thirteen weeks and
thirty-nine weeks ended August 1, 1997 and August 2, 1996

         Consolidated Balance Sheets as of August 1, 1997 and November 1, 1996

         Consolidated Statements of Cash Flows for the thirteen weeks and
thirty-nine weeks ended August 1, 1997 and August 2, 1996

         Condensed Notes to Consolidated Financial Statements

                                       2
<PAGE>


                             TEXFI INDUSTRIES, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
<S>                                    <C>         <C>          <C>         <C>       



                                        THIRTEEN WEEKS ENDED    THIRTY-NINE WEEKS ENDED
                                        AUGUST 1,   August 2,    AUGUST 1,   August 2,
                                          1997        1996         1997        1996
                                       ----------  ----------   ----------  ---------

NET SALES ...........................  $   54,158  $   50,459   $  156,927  $  138,794
                                       ----------  ----------   ----------  ----------

COST AND EXPENSES:
   Cost of goods sold ...............      47,841      43,472      135,887     120,227
   Selling, general and
         administrative  ............       4,013       3,784       11,464       9,676
                                        ----------  ----------   ----------   ---------
      Total .........................      51,854      47,256      147,351     129,903
                                       ----------  ----------   ----------   ---------

OPERATING INCOME.....................       2,304       3,203        9,576       8,891
                                       ----------  ----------   ----------   ---------

OTHER EXPENSE (INCOME):
   Interest .........................       2,581       2,567        7,804       7,683
   Equity in loss of unconsolidated
         subsidiary .................         423          --          982        --
   Other, net .......................         --            1          (95)        (20)
                                       ----------  ----------   ----------  ----------
      Total .........................       3,004       2,568        8,691       7,663
                                       ----------  ----------   ----------  ----------

NET (LOSS) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES.......        (700)        635          885       1,228

Benefit from Income Taxes ...........         (32)        --           --         --
                                       ----------   ----------  ----------- -----------

NET (LOSS) INCOME BEFORE
DISCONTINUED OPERATIONS .............        (668)        635          885       1,228

DISCONTINUED OPERATIONS:
   Loss from operations of discontinued
   operations........................        --        (1,817)        --        (2,893)
   Loss from disposal of discontinued
   operations........................        --           (75)        --          (150)
                                       ----------  ----------   ----------  ----------
      Total..........................        --        (1,892)        --        (3,043)
                                       ----------  ----------   ----------  ----------

NET (LOSS) INCOME ...................  $     (668) $   (1,257)  $      885   $  (1,815)
                                       ==========  ==========   ==========   =========

NET (LOSS) INCOME PER SHARE:
   Net (loss) income from continuing
      operations ....................      $ (.07)  $     .07        $ .10      $  .14
   Loss from discontinued
      operations ....................        --          (.21)         --         (.35)
                                       ----------   ---------    ---------   ---------
   Net (loss)income .................       $(.07)  $    (.14)       $ .10      $ (.21)
                                       ==========   =========    =========   =========

</TABLE>

See Notes to Consolidated Financial Statements on page 6.


                                       3
<PAGE>



                             TEXFI INDUSTRIES, INC.

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>
<S>                                         <C>                 <C>

                                           (UNAUDITED)
                                            AUGUST 1,       November 1,
                                              1997             1996
                                            ----------      -----------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents ..............  $    757            418
  Receivables:
     Due from factor......................    39,361         40,885
     Trade ...............................     5,126          3,555
     Other ...............................       383            130
  Inventories ............................    21,846         22,179
  Prepaid expenses........................     1,605          1,301
                                           ---------       --------
     Total................................    69,078         68,468

PROPERTY, PLANT AND EQUIPMENT - NET ......    30,777         30,223

PROPERTY, PLANT AND EQUIPMENT HELD FOR

   DISPOSAL - NET ........................     8,291         13,461

INVESTMENT IN UNCONSOLIDATED

   SUBSIDIARY ............................     1,531             87

OTHER ASSETS .............................     1,408          1,951
                                            --------      ---------

                                            $111,085      $ 114,190
                                            ========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
   Current maturities of long-term debt ... $  6,662      $   6,563
   Current maturities of sub. debt ........    3,183          3,537
   Accounts payable .......................   29,636         22,182
   Other liabilities ......................    2,865          8,625
                                            --------       --------
      Total................................   42,346         40,907

REVOLVING CREDIT LOAN......................   41,203         38,967

LONG-TERM DEBT ............................    2,325          9,952

SUBORDINATED DEBENTURES ...................   36,841         36,943

OTHER LONG-TERM OBLIGATIONS ...............      205            562

COMMON STOCKHOLDERS' EQUITY (DEFICIT):
  Common stock, $1.00 par value ..........     8,842          8,735
  Additional paid-in capital .............    25,499         25,186
  Accumulated deficit ....................   (46,176)       (47,062)
                                            --------       --------
      Total...............................   (11,835)       (13,141)
                                            --------       --------
                                            $111,085       $114,190


</TABLE>

See Notes to Consolidated Financial Statements on page 6.

                                       4
<PAGE>



                             TEXFI INDUSTRIES, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)


<TABLE>
<CAPTION>
<S>                                        <C>          <C>        <C>          <C>      

                                            THIRTEEN WEEKS ENDED        THIRTY-NINE WEEKS ENDED
                                             AUGUST 1,   August 2,    AUGUST 1,         August 2,
                                               1997        1996         1997              1996
                                             ---------    ---------    --------          ------
OPERATING ACTIVITIES
Net (loss) income ....................     $   (668)    $ (1,257)  $    885            $ (1,815)
Adjustments to reconcile net (loss)
income to net cash provided by (used in)
operating activities:
         Equity in loss of unconsolidated
             Subsidiary .................       423          --         982                 --
      Depreciation & amortization ....        1,324        2,127      3,873               6,280
      Provision for losses on accounts
      receivable.......................          30          392        163                 830
      Loss on sale of property, plant
      and equipment....................          --           (1)       (81)                  4
Changes in operating assets and liabilities:
      Accounts receivable .............       1,007       (2,227)      (463)            (38,862)
      Inventories .....................       1,578        2,171        333                 539
      Prepaid and other assets ........         452          141       (113)                --
      Accounts payables and accrued
      liabilities .....................      (1,049)        (311)     1,337              (2,754)
                                           --------       --------   -------            --------
NET CASH PROVIDED BY (USED IN)
      OPERATING ACTIVITIES                    3,097        1,035      6,916              (35,778)

INVESTING ACTIVITIES
Purchases of property, plant and
 equipment ............................      (1,747)      (1,710)    (7,973)              (5,972)
Proceeds from sale-lease back of
 property, plant and equipment.........       2,446          142      6,657                1,245
Proceeds from sale of property, plant
 and equipment.........................         461        1,491      2,721                2,351
                                           --------      -------    -------              -------
NET CASH PROVIDED BY (USED IN)
      INVESTING ACTIVITIES                    1,160          (77)     1,405               (2,376)
FINANCING ACTIVITIES
Proceeds from long-term debt borrowing.         --          --          --                19,000
Net (repayments)proceeds from Revolver
 Debt borrowings.......................      (1,431)         912      2,236               40,783
Payments on long-term debt obligations.      (3,105)      (1,699)    (7,528)             (21,129)
Investment in unconsolidated subsidiary      (1,108)        --       (2,426)                 --
Payments for repurchase of subordinated
 debentures ...........................         (10)        --         (456)                (244)
Capitalized loan costs.................        (112)        (107)      (229)                (803)
Proceeds from employee stock plans ....         --          --          421                  201
                                            -------       -------    -------              ------

NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES                         (5,766)        (894)    (7,982)              37,808
                                            -------      -------    -------               ------
(DECREASE) INCREASE IN CASH AND CASH
      EQUIVALENTS                            (1,509)          64        339                 (346)

Cash and cash equivalents
 at beginning of period ................      2,266          337        418                  747
                                           --------     --------    -------            ---------

CASH AND CASH EQUIVALENTS
      AT END OF PERIOD                     $    757     $    401    $   757            $     401
                                           ========     ========    =======    =========


</TABLE>

See Notes to Consolidated Financial Statements on page 6.

                                       5
<PAGE>



                             TEXFI INDUSTRIES, INC.


              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 AUGUST 1, 1997

1.  Details of certain balance sheet captions are as follows (in thousands):

                                              (UNAUDITED)
                                               AUGUST 1,   November 1,
                                                  1997        1996
          INVENTORIES:
  Finished goods .............................  $  7,098     $ 10,304
  Goods in process ...........................     7,731        8,765
  Raw materials ..............................     4,267        4,104
  Supplies ...................................     3,377        3,337
                                                --------     --------
       Total .................................    22,473       26,510
  Less reserves ..............................       627        4,331
                                                --------     --------
       Inventories-net........................  $ 21,846     $ 22,179
                                                ========     ========

PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements ...................  $  2,547     $  2,358
Buildings ....................................    17,877       15,170
Machinery, equipment, etc. ...................    57,347       56,306
Construction in progress .....................     3,224        2,218
                                                --------     --------
         Total ...............................    80,995       76,052
Less accumulated depreciation ................    50,218       45,829
                                                --------      -------
         Property, plant and equipment, net...  $ 30,777     $ 30,223
                                                ========     ========

LONG-TERM DEBT:
  Term loan with variable interest of 9.02% at August 1, 1997 and 8.47% at
    November 1,1996, payable in equal monthly installments until balloon payment
    due
    September 1998...........................   $ 8,309   $ 15,367
  Term loans at 6.75%, payable in monthly
    installments plus interest through
    November 1998............................       678      1,148
                                                -------    -------
      Total .................................     8,987     16,515
  Less current maturities ...................     6,662      6,563
                                                -------    -------
      Due after one year ....................   $ 2,325    $ 9,952
                                                =======    =======

                                       6
<PAGE>



1.  Continued

                                          AUGUST 1,    November 1,
                                             1997        1996
SUBORDINATED DEBENTURES:
Senior Subordinated Debentures,
 8 3/4% due August 1, 1999............   $  34,410    $ 34,420
Subordinated Extendible Debentures,
 11%, due April 1, 2000
 (Series C)...........................       2,431       2,523
Convertible Senior Subordinated
 Debentures, 11-1/4% due October
 1, 1997 .............................       3,183       3,537
                                         ---------    --------
         Total .......................      40,024      40,480
Less current maturities...............       3,183       3,537
                                          --------    --------
         Due after one year...........    $ 36,841    $ 36,943
                                          ========    ========

2. Net income per share has been computed using the weighted average number of
common shares and common share equivalents outstanding during the period. The
difference between primary and fully diluted net income per share is not
material for the periods presented.
         In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted for
periods ending after December 15, 1997. Upon adoption, the Company will be
required to change the method currently used to compute earnings per share and
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options, if any, will be
excluded. The impact of Statement No. 128 on the calculation of both the
Company's primary and fully diluted earnings per share for the periods presented
is not expected to be material.

3.        At August 1, 1997 shares of common stock were reserved for
possible issuance as follows:

 Conversion of 11-1/4% Convertible Senior
 Subordinated Debentures ........................       475,783
 Stock options ..................................       858,099
 Stock options granted to an entity owned by
 certain Company officers........................       600,000
 1990 Executive Stock Purchase Plan .............       283,992
 Directors' Deferred Stock Compensation Plan ....        57,153
                                                      ---------
         Total ..................................     2,275,027
                                                      =========

4. The consolidated statement of operations for the thirteen and thirty-nine
weeks ended August 2, 1996 has been restated to reflect the manufacturing
operations of the Company's Kingstree Knit Apparel division as discontinued
operations.

                                       7
<PAGE>



Item 2.  Management's Discussion and Analysis of Financial

         Condition and Results of Operations

RESULTS OF OPERATIONS:

         Net sales for the thirteen weeks ended August 1, 1997 increased to
$54,158,000 as compared to $50,459,000 for the thirteen weeks ended August 2,
1996. This $3,699,000 (7.3%) increase resulted from increased sales at the
Company's Texfi Blends division ("Texfi Blends")($4,863,000), which were
partially offset by decreased sales at the Company's Narrow Fabrics division
("Narrow Fabrics") ($1,164,000). Year-to-date net sales for 1997 totaling
$156,927,000 increased $18,133,000 (13.1%) when compared to sales of
$138,794,000 for the same thirty-nine week period in fiscal 1996. This increase
reflects increased sales of $20,600,000 at Texfi Blends, which was offset
partially by decreases in Narrow Fabrics' sales of $2,500,000. Third quarter and
year-to-date increased sales by Texfi Blends were attributable to higher demand
and shipments for many of this division's synthetic fabrics which are sold to
apparel and specialty markets. Decreases in Narrow Fabrics' sales resulted from
closure of the Company's woven narrow fabrics facility on November 1, 1996 which
offset gains in sales of knitted elastic fabrics totaling $1,500,000 and
$3,400,000 for the thirteen and thirty-nine weeks in fiscal 1997, respectively,
when compared to 1996 results.

         For the comparable thirteen-week period, cost of goods sold, as a
percentage of net sales, increased from 86.1% in 1996 to 88.3% in 1997. For the
comparable thirty-nine week periods in 1997 and 1996, cost of goods sold as a
percentage of net sales remained constant at 86.6%. During 1997, Texfi Blends
experienced lower margins, primarily a result of higher labor costs associated
with the installation of $18,000,000 of new equipment, the resulting need to
train associates to operate this equipment, and manufacturing inefficiencies
created by increasing production rates to maximum levels in order to meet higher
customer demand. There were, however, improvements during 1997 at Narrow Fabrics
as a result of closing the woven elastic operations and a better mix of higher
margin knitted elastic products sold.

         Selling, general and administrative expenses ("SG&A") decreased from
7.5% to 7.4% as a percentage of net sales for the thirteen weeks ended August 1,
1997 when compared to same period a year ago and increased from 7.0% to 7.3% for
the comparable thirty-nine week periods. The year-to-date increase, as a
percentage of net sales, is primarily due to greater distribution costs in order
to accommodate the increased sales volume as well as costs incurred to expand
into new markets.

                                       8
<PAGE>


RESULTS OF OPERATIONS (continued):

         Interest expense increased $14,000 (0.6%) from $2,567,000 during the
third thirteen-week period in 1996 to $2,581,000 in 1997. For the comparable
thirty-nine week periods, interest expense increased $121,000 (1.6%) from
$7,683,000 to $7,804,000. These increases resulted from higher floating rates on
debt outstanding which offset principal reductions made since the third quarter
of 1996.

         The equity in loss of unconsolidated subsidiary of $423,000 in the
third fiscal quarter and $982,000 for the first thirty-nine weeks of 1997
represents the Company's share of costs related to the startup of RIVAL, LLC.
RIVAL, LLC., which is jointly owned by the Company and NHL Enterprises, was
created to market and source a branded line of hockey-related apparel.

FINANCIAL CONDITION:

         At August 1, 1997, working capital equaled $26.7 million, a decrease of
$900,000 from November 1, 1996. This decrease in working capital is due
primarily to the increase in accounts payable and other liabilities ($1.7
million) and decrease in inventories ($333,000) which were not entirely offset
by increases in accounts receivable ($300,000), prepaid expenses ($304,000), and
cash and cash equivalents ($339,000) and a decrease in current maturities
($255,000).

         During the first thirty-nine weeks of 1997, operating activities
generated net cash of $6.9 million. This cash was generated as a result of net
income of $885,000, the equity in loss of unconsolidated subsidiary of $982,000,
depreciation and amortization of $3.9 million, along with increases in accounts
payables and accrued liabilities of $1.3 million and decreases in inventories of
$333,000 which more than offset increases in accounts receivable of $300,000 and
prepaid and other assets of $113,000. Net cash flow provided by operations of
$6.9 million, $2.7 million in proceeds from the sale of property, plant and
equipment of discontinued operations, $6.7 million from the sale-lease back of
property, plant and equipment, net proceeds from the revolving line of credit of
$2.2 million and cash on hand provided funds to repay long-term debt and
debentures of $8.0 million, purchase property, plant and equipment totaling $8.0
million, and invest $2.4 million in the unconsolidated subsidiary.

                                       9
<PAGE>


FINANCIAL CONDITION (continued):

         On March 15, 1996, the Company entered into a $74.0 million credit
facility (subsequently amended to $71.0 million), of which $54.7 million was
initially utilized. Net proceeds from the credit facility were applied toward
the previously existing term loans and outstanding factor advances. The new
facility consisted of a $19.0 million term loan, payable in 29 equal monthly
installments with a balloon payment in September 1998, and a revolving credit
line which, as amended, cannot exceed $52.0 million during the life of the
facility. The revolving credit line, which expires on the same date as the term
loan's final maturity, replaced the Company's factor advance arrangements. As of
August 1, 1997, funds available under the revolving credit line, which
represents the difference between the borrowing base as defined by the facility
agreement and the revolving credit line outstanding, approximated $5.8 million.
The credit facility is secured by substantially all of the Company's assets. The
credit facility currently provides for the Company to elect interest rates based
upon a LIBOR or prime interest rate plus applicable margin. The applicable
margin is adjusted each fiscal year based upon the Company's leverage ratio as
defined in the credit facility. In addition, the Company may elect interest
periods of 30, 60, 90 or 180 days.

         The facility places limitations on the Company's rental expense,
additional indebtedness, acquisitions, capital expenditures, payment of
subordinated debentures, and sale or disposal of assets. The Company is required
to maintain a minimum net worth and comply with certain financial ratios,
including current ratio, coverage ratio, and leverage ratio, each as defined by
the facility. This facility has been periodically amended to ease the
restrictive covenants therein so that the Company would remain in compliance
with all covenant requirements and effect certain other changes. As of August 1,
1997, the Company was in compliance with all of the facility's financial
covenants.

         The Company had $3.2 million of 11-1/4% Convertible Senior Subordinated
Debentures outstanding as of August 1, 1997. These debentures, which are
convertible to common stock at the option of the debenture holders for $6.69 per
share, mature on October 1, 1997 and are classified as a current liability.

         As of August 1, 1997 the Company has approximately $2.4 million of its
Series C Debentures outstanding. The annual interest rate of these debentures
may be adjusted at the sole discretion of the Company on April 1st of each year
until maturity in the year 2000. The Company set the Series C interest rate at
13.0% for the period April 1, 1997 through March 31, 1998. The Series C
Debentures are redeemable on April 1st of each year, in whole or in part, at the
option of the holder or the Company for the principal amount thereof plus
accrued interest through the date of redemption.

                                       10
<PAGE>

FINANCIAL CONDITION (continued):

         As of August 1, 1997, the Company had outstanding approximately $34.4
million of its Senior Subordinated Debentures due August 1, 1999 ("8-3/4%
Debentures"). The 8-3/4% Debentures, which cannot be called prior to their
maturity date, are unsecured obligations. These debentures contain covenants
that place limitations on the use of proceeds from the disposal of assets and on
the incurrence of additional indebtedness and senior indebtedness (as defined in
the indenture governing the 8-3/4% Debentures (the "Indenture")) if such
indebtedness would exceed stated ratios of capitalization and earnings after
such incurrence. Under the most restrictive of these covenants, the Company may
not incur additional indebtedness if, after giving effect to such incurrence,
the aggregate amount of indebtedness of the Company would exceed 75% of the sum
of all indebtedness and stockholders' (deficit) equity. The Company is currently
prohibited by this covenant from incurring additional indebtedness other than
advances under its revolving credit line and operating leases. This restriction
on the incurrence of additional indebtedness was waived by debenture holders
with respect to the new credit facility. As a condition to the waiver, the
Company executed a Second Supplemental Indenture dated March 15, 1996 which
provided that beginning on the last business day of September 1998 and
continuing on the last business day of each month thereafter to and including
June 1999, the Company will deposit with the Indenture's trustee $600,000 less
an amount equal to 8-3/4% Debentures repurchased during the period prior to the
monthly payment date. Total deposits, including interest earned thereon, are to
be paid as principal and interest when the 8-3/4% Debentures are due.

         The Company plans to place into service $11.6 million of machinery and
equipment during fiscal 1997. This equipment primarily will increase dyeing and
finishing capacity as well as replace older weaving equipment with new looms in
order to improve production speed, efficiency and product quality and to expand
styling diversity. Management anticipates that $10.9 million of the $11.6
million of equipment will be placed into service through operating leases and
thus not included in the Company's balance sheet. For the thirty-nine weeks
ended August 1, 1997, $8.0 million had been expended on machinery and equipment
purchases and $6.7 million received from proceeds of sale-lease back
transactions related to this equipment.

         The Company has entered into nonbinding letters of intent to sell both
its Narrow Fabrics operations and its Graham, North Carolina facility, an asset
held for disposal. These two separate transactions are subject to certain
conditions, including the execution of definitive purchase agreements and Board
of Directors approval. The transactions, if consummated, are anticipated to
close during the Company's fourth fiscal quarter and any net proceeds would be
used by the Company to reduce its long-term debt and revolving credit line.

                                       11
<PAGE>


FINANCIAL CONDITION (continued):

         Management believes cash flows from operations, funds available under
the revolving credit line, and net proceeds from the disposal of assets held for
disposal will provide the Company with sufficient sources of funds to meet its
fiscal 1997 cash needs, and, assuming no significant deterioration in current
market conditions or interest rates, for the foreseeable future.

FORWARD LOOKING INFORMATION:

         Statements contained in the foregoing discussion and elsewhere in this
report that are not based on historical fact are considered "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's present assumptions as to
future trends, and changes in current economic trends, prevailing interest
rates, availability and cost of raw materials, laws affecting the Company's
business and similar factors could affect the validity of such assumptions.


                                       12
<PAGE>



                           PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K:

     (a) Exhibits

                  Exhibits to this report are listed in the accompanying index
to exhibits.

     (b) Reports on Form 8-K

                  No reports on From 8-K were filed during the quarter 
          ended   August  1, 1997.
                        


                                       13
<PAGE>



                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              TEXFI INDUSTRIES, INC.
                                   (Registrant)



Date: September 15, 1997           By:S/Dane L. Vincent
                                      -----------------
                                   Dane L. Vincent
                                   Chief Financial Officer and
                                   Treasurer

                                   Principal Accounting Officer


                                       14
<PAGE>



                             TEXFI INDUSTRIES, INC.
                                INDEX TO EXHIBITS

TEXFI INDUSTRIES, INC.

                                                     INDEX TO EXHIBITS
*3(a)(1)          Restated Certificate of Incorporation of Registrant
                  dated August 13, 1969, filed as Exhibit (3)(a)(1) to
                  Registrant's Form 10-K Annual Report for the fiscal year ended
                  October 31, 1980.

*3(a)(2)          Certificate of Amendment of Certificate of
                  Incorporation of Registrant dated March 16, 1972, filed as
                  Exhibit (3)(a)(2) to Registrant's Form 10-K Annual Report for
                  the fiscal year ended October 31, 1980.

*3(a)(3)          Certificate of Amendment of Certificate of
                  Incorporation of Registrant dated March 27, 1978, filed as
                  Exhibit (3)(a)(3) to Registrant's Form 10-K Annual Report for
                  the fiscal year ended October 31, 1980.

*3(a)(4)          Certificate of Amendment of Certificate of
                  Incorporation of Registrant dated May 19, 1986, filed as
                  Exhibit 4.4 to Registrant's Form S-8 Registration Statement
                  (No. 33-14697).

*3(a)(5)          Certificate of Amendment of Certificate of
                  Incorporation of Registrant dated March 20, 1987, filed as
                  Exhibit 4.5 to Registrant's Form S-8 Registration Statement
                  (No. 33-14697).

*3(a)(6)          Certificate of Amendment of Certificate of
                  Incorporation of Registrant dated September 28, 1987, filed as
                  Exhibit 4(a)(6) to Registrant's Form S-2 Registration
                  Statement (No. 33-16794).

*3(a)(7)          Certificate of Designations of Registrant dated
                  November 20, 1987, filed as Exhibit 4(a)(7) to Registrant's 
                  Form S-2 Registration Statement (No. 33-16794).

*3(a)(8)          Certificate of Designations of Registrant dated March
                  8,1988 filed as Exhibit 4(a)(8) to Registrant's Form S-2 
                  Registration Statement (No. 33-20131).

*3(a)(9)          Certificate of Designations of Registrant dated August
                  4 1988, filed as Exhibit 4(d)(9) to Registrant's Form 10-Q
                  Quarterly Report for the fiscal quarter ended July 29, 1988.


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*3(b)(1)          Bylaws of Registrant, filed as Exhibit 4.6 to
                  Registrant's Form S-8 Registration Statement (No. 33-14697).

*3(b)(2)          Amendment to Bylaws of Registrant, filed as Exhibit
                  4(b)(2) to Registrant's Form S-2 Registration Statement 
                  (No. 33-16794).

*3(b)(3)          Amendment to Bylaws of Registrant adopted by
                  Registrant's Board of Directors on January 18, 1991, filed as
                  Exhibit 3(b)(3) to Registrant's Form 10-K Annual Report for
                  the fiscal year ended November 2, 1990.

*3(b)(4)          Amendment to Bylaws of Registrant adopted by
                  Registrant's Board of Directors on August 31, 1994, filed as
                  Exhibit 4(b)(4) to Registrant's Form 10-Q Quarterly Report for
                  the fiscal quarter ended July 29, 1994.

*3(b)(5)          Amendment to Bylaws of Registrant adopted by
                  Registrant's Board of Directors on September 7, 1994, filed as
                  Exhibit 4(b)(5) to Registrant's Form 10-Q Quarterly Report for
                  the fiscal quarter ended July 29, 1994.

*4(a)(1)          Indenture between Registrant and Rhode Island Hospital
                  Trust National Bank, Trustee, with a copy of Subordinated
                  Debentures due April 1, 1995, Series A, Subordinated
                  Debentures due April 1, 1995, Series B and Subordinated
                  Extendible Debentures due April 1, 2000, Series C attached,
                  filed as Exhibit 4(f) to Registrant's Form S-2 Registration
                  Statement (No. 33-32485).

*4(a)(2)          First Supplemental Indenture between Registrant and
                  Rhode Island Hospital Trust National Bank, Trustee, with a
                  revised Subordinated Debenture due April 1, 1995, Series B
                  attached, filed as Exhibit 4 to Registrant's Form 8-K Current
                  Form dated May 16, 1990.

*4(a)(3)          Indenture dated October 1, 1991 between Registrant and
                  The First National Bank of Boston, Trustee, with copy of
                  11-1/4% Convertible Senior Subordinated Debenture due October
                  1, 1997, filed as Exhibit 4(a)(1) to Registrant's Form 10-K
                  Annual Report for the fiscal year ended November 1, 1991.


<PAGE>


*4(a)(4)          Indenture dated September 8, 1993 between Registrant
                  and The First Union National Bank of North Carolina, Trustee,
                  with copy of 8-3/4% Senior Subordinated Debenture due August
                  1, 1999, filed as Exhibit 4(c)(2) to Registrant's Form 10-Q
                  Quarterly Report for the fiscal quarter ended July 30, 1993.

*4(a)(5)          First Supplemental Indenture dated as of March 10,
                  1995, between Registrant and First Union National Bank of
                  North Carolina, as Trustee, filed as Exhibit 4(a)(1) to
                  Registrant's Form 8-K Current Report as of March 15, 1996.

*4(a)(6)          Second Supplemental Indenture dated as of March 15,
                  1996, between Registrant and First Union National Bank of
                  North Carolina, as Trustee, filed as Exhibit 4(a)(2) to
                  Registrant's Form 8-K Current Report as of March 15, 1996.

*4(b)(1)          Specimen Common Stock ($1 par value) certificates,
                  filed as Exhibit 4.01 to Amendment No. 2 to Registrant's 
                  Form S-1 Registration Statement (No. 2-41653).

*4(c)(1)          Rights Agreement dated July 22, 1988 between Registrant
                  and The First Union National Bank of North Carolina, as Rights
                  Agent, filed as Exhibit 1 to Registrant's Form 8-K Current
                  Form dated July 22, 1988.

*4(c)(2)          Form of Rights Certificate, filed as Exhibit B to
                  Exhibit 1 to Registrant's Form 8-K Current Form dated July 22,
                  1988.

*4(c)(3)          Amendment to Rights Agreement between Registrant and
                  The First Union National Bank of North Carolina dated October
                  31, 1988, filed as Exhibit 4(e)(3) to Registrant's Form S-2
                  Registration Statement (No. 33-32485).

*4(c)(4)          Second Amendment to Rights Agreement dated May 24, 1994
                  between Registrant and The First Union National Bank of North
                  Carolina, as Rights Agent, filed as Exhibit 4(e)(4) to
                  Registrant's Form 10-Q Quarterly Report for the fiscal quarter
                  ended April 29, 1994.



<PAGE>


*4(c)(5)          Third Amendment to Rights Agreement dated December 16,
                  1994 between Registrant and The First Union National Bank of
                  North Carolina, as Rights Agent, filed as Exhibit 4(c)(5) to
                  Registrant's Form 10-K Annual Report for the fiscal year ended
                  October 28, 1994.

*4(d)(1)          Credit agreement dated as of March 15, 1996 among Registrant,
                  as Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a)(1) to Registrant's
                  Form 8-K Current Report as of March 15, 1996.

*4(d)(2)          Security Agreement dated as of March 15, 1996 between
                  Registrant, as Grantor, and NationsBank, N.A., as Agent for
                  certain Lenders referred to therein, and NationsBanc
                  Commercial Corporation, as Disbursing Agent, filed as Exhibit
                  2(a)(2) to Registrant's Form 8-K Current Report as of March
                  15, 1996.

*4(d)(3)          Form of Deed of Trust and Security Agreement (North
                  Carolina property) dated as of March 15, 1996 between
                  Registrant, as Grantor, TIM, Inc., as Trustee, and
                  NationsBank, N.A., as Beneficiary and Agent for certain
                  Lenders referred to therein, and NationsBanc Commercial
                  Corporation, as Disbursing Agent, filed as Exhibit 2(a)(3) to
                  Registrant's Form 8-K Current Report as of March 15, 1996.

*4(d)(4)          Form of Mortgage and Security Agreement (South Carolina
                  property) dated as of March 15, 1996 between Registrant, as
                  Grantor, and NationsBank, N.A., as Beneficiary and Agent for
                  certain Lenders referred to therein, and NationsBanc
                  Commercial Corporation, as Disbursing Agent, filed as Exhibit
                  2(a)(4) to Registrant's Form 8-K Current Report as of March
                  15, 1996.

*4(d)(5)          Deed to Secure Debt and Security Agreement (Georgia
                  property) dated as of March 15, 1996 between Registrant, as
                  Grantor, and NationsBank, N.A., as Beneficiary and Agent for
                  certain Lenders referred to therein, and NationsBanc
                  Commercial Corporation, as Disbursing Agent, filed as Exhibit
                  2(a)(5) to Registrant's Form 8-K Current Report as of March
                  15, 1996.


<PAGE>


*4(d)(6)          Form of Assignment of Factoring Proceeds dated as of
                  March 15, 1996, filed as Exhibit 2(a)(6) to Registrant's Form
                  8-K Current Report as of March 15, 1996.

*4(d)(7)          First Amendment dated May 10, 1996 to the Credit
                  Agreement dated as of March 15, 1996 among Registrant, as
                  Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a)(7) to Registrant's
                  Form 10-Q dated May 3, 1996.

*4(d)(8)          Waiver Agreement dated June 14, 1996 to the Credit
                  Agreement dated as of March 15, 1996 among Registrant, as
                  Borrower, certain Lenders, referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a) (8) to Registrant's
                  Form 10-Q dated May 3, 1996.

*4(d)(9)          Second Amendment dated September 12, 1996 to the Credit
                  Agreement dated as of March 15, 1996 among Registrant, as
                  Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 2(a)(9) to Registrant's
                  From 10-Q dated August 2, 1996.

*4(d)(10)         Third Amendment dated January 30, 1997 to the Credit
                  Agreement dated as of March 15, 1996 among Registrant, as
                  Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 4(d)(10) to Registrant's
                  Form 10-K dated January 31, 1997.

*4(d)(11)         Waiver and Consent Agreement dated June 12, 1997 to the
                  Credit Agreement dated as of March 15, 1996 among Registrant,
                  as Borrower, certain Lenders referred to therein, NationsBank,
                  N.A., as Agent, and NationsBanc Commercial Corporation, as
                  Disbursing Agent, filed as Exhibit 4(d)(11) to Registrant's
                  Form 10-Q dated May 2, 1997.

4(d)(12)          Fourth Amendment dated June 19, 1997 to the Credit Agreement
                  dated as of March 15, 1996 among Registrant, as Borrower,
                  certain Lenders referred to therein, NationsBank, N.A., as
                  Agent, and NationsBanc Commercial Corporation, as Disbursing
                  Agent.


<PAGE>



10                Employment Agreement between Registrant and Andrew J.
                  Parise, Jr. dated April 1, 1997.

11                Computation of Earnings Per Share

* Incorporated by reference to previous filing.



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